New Audit Risk Standards Introduce Risk-Based Audit Approach

HKSA 315, “Understanding of the Entity and Its Environment and Assessing the Risks of Material Misstatement”

HKSA 330, “The Auditor's Procedures in Response to Assessed Risks”

HKSA 500, “Audit Evidence”

This re-run session will explain how these new Standards will affect the way auditors conduct their audits.

The new Standards enable auditors to more clearly focus on areas where there is a greater risk of misstatement of the financial statements. It is anticipated that implementation of the new Standards will increase the quality of audits by improving the linkage of audit procedures and assessed risks.

Changes in practice that the new Standards seek to achieve, include:

	Obtaining, and documenting, a broader understanding of the entity and its environment, including its process for identifying business risks relevant to financial reporting objectives, and its information systems and internal control;
	An audit team discussion of the susceptibility of the entity's financial statements to material misstatement;
	Determining which risks identified are “significant risks” that require special audit consideration; and
	Designing and performing further audit procedures that are linked to the assessed risks.

Auditors should note that new Audit Risk Standards will be effective for audits of financial statements for periods beginning on or after 15 December 2004.

Application deadline: 26 May 2005

New Quality Control Standards for Auditors

This re-run session will cover the following 2 important Auditing Standards issued by the Institute.

	Hong Kong Standard on Quality Control 1”Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements”; and
	Hong Kong Standard on Auditing 220 “Quality Control for Audits of Historical Financial Information”, adopting the equivalent International Auditing Standards.

Whilst quality control policies and procedures are not new to the accounting profession, these two Standards introduce several new concepts and requirements, including the extension of certain aspects to “other assurance and related services engagements”. Certain of the new requirements will have far reaching implications and necessitate more rigorous quality control policies and procedures being implemented by auditors.

Auditors should start to make a critical assessment of their existing quality control policies and procedures and audit documentation to see whether they are sufficient to comply with the systems of quality controls under HKSQC 1 which are required to be set up by 15 June 2005, and in terms of HKSA 220, quality controls over audits of historical financial information which are required to be set up for periods beginning on or after 15 June 2005.

Revised Standard on Fraud Consideration

This re-run session will cover the Hong Kong Standard on Auditing 240 “The Auditor's Responsibility to Consider Fraud in an Audit of Financial Statements”.

Application deadline: 26 June 2005

21 Replacement Hong Kong Auditing Standards

Are you aware that a complete set of new auditing standards will come into force?

Do you have a plan to deal with these changes?

This session will explain the impact on auditors of the 21 new Hong Kong Standards on Auditing and Review Engagements soon to be issued, highlighting the key changes and new requirements and guidance introduced as compared with their SAS counterparts:

HKSA 210 (SAS 140) Engagement letters

HKSA 250 (SAS 120) Consideration of laws and regulations

HKSA 260 (SAS 610) Communication with those charged with governance

HKSA 320 (SAS 220) Audit materiality

HKSA 402 (SAS 480) Using service organizations

HKSA 501 (SAS 401) Considerations for specific items

HKSA 505 (SAS 402) External confirmations

HKSA 510 (SAS 450) Opening balances

HKSA 520 (SAS 410/470) Analytical procedures

HKSA 530 (SAS 430) Audit sampling

HKSA 540 (SAS 420) Accounting estimates

HKSA 545 (SAS 421) Fair value measurements and disclosures

HKSA 550 (SAS 460) Related parties

HKSA 560 (SAS 150) Subsequent events

HKSA 570 (SAS 130) Going concern

HKSA 580 (SAS 440) Management representations

HKSA 610 (SAS 500A) Considering the work of internal audit

HKSA 620 (SAS 520) Using the work of an expert

HKSA 710 (SAS 450) Comparatives

HKSA 720 (SAS 160) Other information in documents containing audited financial statements

HKSRE 2400 (SAS 700) Engagements to review financial statements

The 20 proposed HKSA are intended to be effective for audits of financial statements for periods beginning on or after 15 December 2004. Auditors should look at their software, audit manuals and audit documentation to make sure that they will comply with the new Standards.

Application deadline: 26 July 2005

21 Replacement Hong Kong Auditing Standards

Are you aware that a complete set of new auditing standards have come into force?

Do you have a plan to deal with these changes?

This session will explain the impact on auditors of the 21 new Hong Kong Standards on Auditing and Review Engagements issued, highlighting the key changes and new requirements and guidance introduced as compared with their SAS counterparts:

HKSA 210 (SAS 140) Engagement letters

HKSA 250 (SAS 120) Consideration of laws and regulations

HKSA 260 (SAS 610) Communication with those charged with governance

HKSA 320 (SAS 220) Audit materiality

HKSA 402 (SAS 480) Using service organizations

HKSA 501 (SAS 401) Considerations for specific items

HKSA 505 (SAS 402) External confirmations

HKSA 510 (SAS 450) Opening balances

HKSA 520 (SAS 410/470) Analytical procedures

HKSA 530 (SAS 430) Audit sampling

HKSA 540 (SAS 420) Accounting estimates

HKSA 545 (SAS 421) Fair value measurements and disclosures

HKSA 550 (SAS 460) Related parties

HKSA 560 (SAS 150) Subsequent events

HKSA 570 (SAS 130) Going concern

HKSA 580 (SAS 440) Management representations

HKSA 610 (SAS 500A) Considering the work of internal audit

HKSA 620 (SAS 520) Using the work of an expert

HKSA 710 (SAS 450) Comparatives

HKSA 720 (SAS 160) Other information in documents containing audited financial statements

HKSRE 2400 (SAS 700) Engagements to review financial statements

The 20 proposed HKSA are effective for audits of financial statements for periods beginning on or after 15 December 2004. Auditors should look at their software, audit manuals and audit documentation to make sure that they will comply with the new Standards.

Application deadline: 30 August 2005

Balance sheet I: Non-financial tangible assets other than leases and investment property

Understanding the balance sheet depends on understanding
how non-financial assets and liabilities are recognised,
measured and disclosed. In a series of 3 independent
sessions, we will cover key recognition, measurement and
disclosure requirements for non-financial assets and liabilities.
The first session will summarise the HKFRS requirements for
the recognition, measurement and disclosure of non-financial
tangible assets other than leases and investment property.
The session will first address the classification of assets and
the applicable standards. It will then briefly outline the key
provisions relating to non-financial tangible assets found in
HKAS 16 Property, Plant and Equipment, HK(IFRIC)-Int 1
Changes in Estimated Decommissioning, Restoration and
Similar Liabilities, HKAS 2 Inventories, HKAS 36 Impairment
of Assets and HKFRS 5 Non-current Assets Held for Sale and
Discontinued Operations, and how they apply to:

• Initial recognition of non-financial tangible assets
• Subsequent measurement of property, plant and
equipment: cost or revaluation
• Depreciation
• Impairment of property, plant and equipment and
inventories
• Assets held for sale
• Disclosure issues.

Application deadline: 22 Sept 2005

New Audit Risk Standards Introduce Risk-Based Audit Approach

HKSA 315, “Understanding of the Entity and Its
Environment and Assessing the Risks of Material
Misstatement”
HKSA 330, “The Auditor's Procedures in Response to
Assessed Risks”
HKSA 500, “Audit Evidence”
This re-run session will explain how these new Standards
will affect the way auditors conduct their audits.
The new Standards enable auditors to more clearly focus
on areas where there is a greater risk of misstatement of
the financial statements. It is anticipated that
implementation of the new Standards will increase the
quality of audits by improving the linkage of audit
procedures and assessed risks.
Changes in practice that the new Standards seek to
achieve, include:
• Obtaining, and documenting, a broader understanding
of the entity and its environment, including its process
for identifying business risks relevant to financial
reporting objectives, and its information systems and
internal control;
• An audit team discussion of the susceptibility of the
entity’s financial statements to material misstatement;
• Determining which risks identified are “significant risks”
that require special audit consideration; and
• Designing and performing further audit procedures that
are linked to the assessed risks.
Auditors should note that new Audit Risk Standards are
effective for audits of financial statements for periods
beginning on or after 15 December 2004.

Application deadline: 29 Sep 2005

Balance sheet II: Intangible assets

This session will summarise the HKFRS requirements for
the recognition, measurement and disclosure of intangible
assets, including goodwill.
The session will outline the key provisions relating to
intangible assets found in HKAS 38 Intangible Assets, HKFRS
3 Business Combinations and HKAS 36 Impairment of Assets,
and how they apply to:
• Initial recognition of intangible assets, both purchased
and internally generated
• Subsequent measurement of intangible assets other than
goodwill: cost or revaluation
• Amortisation
• Impairment
• Assets held for sale
• Disclosure issues.

Application deadline: 20 Oct 2005

Balance sheet III: Leases and investment property / Non-financial liabilities

This session will summarise the HKFRS requirements for the
recognition, measurement and disclosure of leases and
investment property. It will complete the overview of the
non-financial part of the balance sheet by considering the
requirements of HKAS 37 Provisions, Contingent Liabilities
and Contingent Assets.
The session will briefly outline the key provisions relating to
leases (HKAS 17 Leases and HK-Int 4 Leases –
Determination of the Length of Lease Term in respect of
Hong Kong Land Leases) and investment property (HKAS
40 Investment Property), noting the changes introduced in
converging with IFRSs.
The session will include a discussion of the key provisions
relating to the recognition of provisions and the disclosure
of contingent assets and contingent liabilities. The session
will conclude with a brief summary of proposed changes to
HKAS 37.

Application deadline: 27 Oct 2005

Revised Standards on Fraud Consideration and Audit Planning for Auditors

This re-run session will cover the following 2 important
Auditing Standards:
• Hong Kong Standard on Auditing 240 “The Auditor’s
Responsibility to Consider Fraud in an Audit of Financial
Statements”; and
• Hong Kong Standard on Auditing 300 “Planning an Audit
of Financial Statements”,
adopting the equivalent International Auditing Standards.
Auditors will enter a much expanded arena of procedures to
detect fraud as they implement HKSA 240. The revised
Standard aims to have the auditors’ consideration of fraud
blended into the audit process and continually updated until
the audit’s completion. HKSA 240 describes a process in
which the auditors (1) gather information needed to identify
risks of material misstatement due to fraud, (2) assess these
risks after taking into account an evaluation of the entity’s
programs and controls and (3) respond to the results. Under
HKSA 240, auditors will gather and consider much more
information to assess fraud risks than they have in the past.
HKSA 300 requires the auditors to plan the audit more
rigorously so that the engagement will be performed in an
effective manner. Auditors are required to establish an overall
audit strategy which helps guide the development of the more
detailed audit plan and ensures that risk assessment procedures
and further detailed audit procedures are appropriately
targeted.
HKSA 300 provides the necessary requirements and guidance
for the auditors to perform this important aspect of the audit
and will assist in improving auditors’ performance.

Application deadline: 3 Nov 2005

Presentation issues

With companies starting to prepare their 2005 financial
statements, this session will overview a number of
presentation issues. The session will focus on disclosures in
HKAS 1 Presentation of Financial Statements, HKAS 7 Cash
Flow Statements, HKAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors and HKFRS 5 Non-current
Assets Held for Sale and Discontinued Operations.
In particular, the session will cover:
• Selection of presentation currency
• Changes to the format of the four statements
• Changes in accounting policy and correction of errors
• Related party disclosures
• New non-financial disclosures

Application deadline: 17 Nov 2005

New Quality Control Standards for Auditors

This re-run session will cover the following 2 important
Auditing Standards:
• Hong Kong Standard on Quality Control 1”Quality
Control for Firms that Perform Audits and Reviews of
Historical Financial Information, and Other Assurance
and Related Services Engagements”; and
• Hong Kong Standard on Auditing 220 “Quality Control
for Audits of Historical Financial Information”, adopting
the equivalent International Auditing Standards.
Whilst quality control policies and procedures are not new to
the accounting profession, these two Standards introduce
several new concepts and requirements, including the
extension of certain aspects to “other assurance and related
services engagements”. Certain of the new requirements
will have far reaching implications and necessitate more
rigorous quality control policies and procedures being
implemented by auditors.
Auditors should make a critical assessment of their existing
quality control policies and procedures and audit
documentation to see whether they are sufficient to
comply with the systems of quality controls under HKSQC
1 which are required to be set up by 15 June 2005, and in
terms of HKSA 220, quality controls over audits of
historical financial information which are required to be set
up for periods beginning on or after 15 June 2005.

Application deadline: 24 Nov 2005

Financial instruments: new disclosures and other changes

The financial instruments standards contain some of the
most complex requirements in accounting standards. This
session will discuss the new disclosure requirements for
financial instruments and the recent changes to HKAS 39
Financial Instruments: Recognition and Measurement.
HKFRS 7 Financial Instruments: Disclosures (recently
released) replaces HKAS 30 Disclosures in the Financial
Statements of Banks and Similar Financial Institutions and
the disclosure requirements in HKAS 32 Financial
Instruments: Disclosure and Presentation. HKFRS 7 brings
into one standard the disclosures that entities need to
make about financial instruments. This session will outline
the main requirements of HKFRS 7 and highlight the key
changes to financial instruments disclosures for reporting
periods beginning on or after 1 January 2007. It will also
cover the new requirement in HKAS 1 Presentation of
Financial Statements to disclose information about the
management of capital.
HKAS 39 Financial Instruments: Recognition and
Measurement (and some other standards) have recently
been amended for changes including the introduction of
constraints on the use of the fair value option, changes to
cash flow hedge accounting and requirements related to
financial guarantees. The changes apply to reporting
periods beginning on or after 1 January 2006. This session
will outline the new requirements.

Application deadline: 2 Dec 2005

21 Replacement Hong Kong Auditing Standards

This re-run session will explain the impact on auditors of
the 21 new Hong Kong Standards on Auditing and Review
Engagements issued, highlighting the key changes and
new requirements and guidance introduced as compared
with their SAS counterparts:
HKSA 210 (SAS 140) Engagement letters
HKSA 250 (SAS 120) Consideration of laws and regulations
HKSA 260 (SAS 610) Communication with those charged with
governance
HKSA 320 (SAS 220) Audit materiality
HKSA 402 (SAS 480) Using service organizations
HKSA 501 (SAS 401) Considerations for specific items
HKSA 505 (SAS 402) External confirmations
HKSA 510 (SAS 450) Opening balances
HKSA 520 (SAS 410/470) Analytical procedures
HKSA 530 (SAS 430) Audit sampling
HKSA 540 (SAS 420) Accounting estimates
HKSA 545 (SAS 421) Fair value measurements and disclosures
HKSA 550 (SAS 460) Related parties
HKSA 560 (SAS 150) Subsequent events
HKSA 570 (SAS 130) Going concern
HKSA 580 (SAS 440) Management representations
HKSA 610 (SAS 500A) Considering the work of internal audit
HKSA 620 (SAS 520) Using the work of an expert
HKSA 710 (SAS 450) Comparatives
HKSA 720 (SAS 160) Other information in documents containing
audited financial statements
HKSRE 2400 (SAS 700) Engagements to review financial statements
The 20 HKSA are effective for audits of financial statements
for periods beginning on or after 15 December 2004.
HKSRE 2400 is effective from June 2005. Auditors should
look at their software, audit manuals and audit
documentation to make sure that they comply with the
new Standards.

Application deadline: 8 Dec 2005

Practice Notes relating to Audit of Listed Issuers

This session will give an outline of the recent Practice Notes issued relating to Audit of Listed Issuers

• PN 720 Acting as Scrutineer at a General Meeting of
a Listed Issuer
• PN 730 Guidance for Auditors Regarding Preliminary Announcements of Annual Results

PN 720 provides guidance to auditors who have been requested by a Listed Issuer to act as scrutineer when a poll is called at a general meeting. PN 730 provides guidance for auditors on their responsibilities with regard to the preliminary announcement of results for the full financial year of a listed issuer.

Stephen Chan
Steve Ong

Business Combinations: New Accounting Guideline on
Merger Accounting and other recent developments

Accounting Guideline (AG) 5 Merger Accounting for Common Control Combinations sets out the basic principles and procedures of merger accounting when recognising a common control combination. This session will give an outline of the guidance in AG 5 and work through a few examples applying the guidance.
This session will also give a brief outline of other recent developments in terms of the accounting for business combinations, including those resulting from the Companies (Amendment) Ordinance 2005 and those proposed under the IASB exposure draft on the proposed revised IFRS 3 Business Combinations.

New Code of Ethics
Issues relevant to Auditors and CPAs in Public Practice

The Institute has recently issued a new Code of Ethics for Professional Accountants that is converged with the IFAC Code of Ethics for Professional Accountants. The new Code of Ethics will be effective from 30 June 2006.
This session will explain the conceptual framework established by the new Code which introduces a threats and safeguards approach to virtually all areas of professional ethics similar to the current approach to independence for assurance engagements. It will focus on ethics for professional accountants in public practice with examples of situations to illustrate the concept introduced by the new Code.

Introduction to Financial Instruments

This session is designed for those who are still struggling with the basic requirements of HKAS 32 Financial Instruments: Disclosure and Presentation and HKAS 39 Financial Instruments: Recognition and Measurement. It will cover existing requirements, and forthcoming changes, at an introductory level:

• Distinction between debt and equity
• Types of financial assets and financial liabilities
• Recognition and derecognition
• Measurement: fair value, amortised cost, impairment
• Derivatives, including embedded derivatives
• Hedge accounting: the three hedge relationships and associated requirements

New Code of Ethics
Issues relevant to Professional Accountants in Business (PAIBs)

Similar to the earlier session on ethics for auditors and CPAs in public practice, this session will explain the conceptual framework established by the new Code which introduces a threats and safeguards approach to virtually all areas of professional ethics similar to the current approach to independence for assurance engagements.

The focus will be on ethics for PAIBs. While the existing Professional Ethics Statements primarily focus on ethics for professional accountants in public practice, Part C of the new Code deals specifically with ethics for PAIBs. This session will discuss some common examples of situations with ethical implications encountered by PAIBs in their work places.

Stephen Chan Elaine Chan

Issues in Preparing Financial Statements

This session will discuss a number of issues relating to the preparation and use of financial statements. Preparers, auditors and users of financial statements need to understand their increased responsibilities now that Hong Kong Financial Reporting Standards are steadily becoming more ‘principles-based’. The session will provide an opportunity for members to raise issues they encountered in applying HKFRSs.

In addressing these issues, this session will cover
• The purpose of financial statements – the differing perspectives of users and preparers
• Principles-based standards and rules-based standards – advantages and disadvantages
• Selection of accounting policies and application of accounting standards: the requirements of HKAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
• The importance of the Framework for the Preparation and Presentation of Financial Statements in selecting and applying accounting policies
• The impact of materiality on financial reporting

Improving Audit Documentation

This session will cover the new Hong Kong Standard on Auditing (HKSA) 230, Audit Documentation, adopting the equivalent International Auditing Standard.

HKSA 230:

• Places increased emphasis on the timely preparation of audit documentation necessary to provide a sufficient and appropriate record of the basis for the auditor’s report
• Establishes a new requirement that the audit is carried out in accordance with HKSAs and applicable legal and regulatory requirements.
• Establishes a new requirement that the auditor completes the assembly of the final audit file on a timely basis after the date of the auditor’s report.
• Establishes a new requirement that the auditor should not delete or discard audit documentation after the final audit file has been assembled, unless the retention period for the audit documentation has elapsed.

Steve Ong

Issues in Preparing Financial Statements

This session will discuss a number of issues relating to the preparation and use of financial statements. Preparers, auditors and users of financial statements need to understand their increased responsibilities now that Hong Kong Financial Reporting Standards are steadily becoming more ‘principles-based’. The session will provide an opportunity for members to raise issues they encountered in applying HKFRSs.

In addressing these issues, this session will cover
• The purpose of financial statements – the differing perspectives of users and preparers
• Principles-based standards and rules-based standards – advantages and disadvantages
• Selection of accounting policies and application of accounting standards: the requirements of HKAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
• The importance of the Framework for the Preparation and Presentation of Financial Statements in selecting and applying accounting policies
• The impact of materiality on financial reporting

Introduction to Financial Instruments

This session is designed for those who are still struggling with the basic requirements of HKAS 32 Financial Instruments: Disclosure and Presentation and HKAS 39 Financial Instruments: Recognition and Measurement. It will cover existing requirements, and forthcoming changes, at an introductory level:

• Distinction between debt and equity
• Types of financial assets and financial liabilities
• Recognition and derecognition
• Measurement: fair value, amortised cost, impairment
• Derivatives, including embedded derivatives
• Hedge accounting: the three hedge relationships and associated requirements

Improving Audit Documentation

This session will cover the new Hong Kong Standard on Auditing (HKSA) 230, Audit Documentation, adopting the equivalent International Auditing Standard.

HKSA 230:

• Places increased emphasis on the timely preparation of audit documentation necessary to provide a sufficient and appropriate record of the basis for the auditor’s report
• Establishes a new requirement that the audit is carried out in accordance with HKSAs and applicable legal and regulatory requirements.
• Establishes a new requirement that the auditor completes the assembly of the final audit file on a timely basis after the date of the auditor’s report.
• Establishes a new requirement that the auditor should not delete or discard audit documentation after the final audit file has been assembled, unless the retention period for the audit documentation has elapsed.

Steve Ong

Issues in Preparing Financial Statements

This session will discuss a number of issues relating to the preparation and use of financial statements. Preparers, auditors and users of financial statements need to understand their increased responsibilities now that Hong Kong Financial Reporting Standards are steadily becoming more ‘principles-based’. The session will provide an opportunity for members to raise issues they encountered in applying HKFRSs.

In addressing these issues, this session will cover
• The purpose of financial statements – the differing perspectives of users and preparers
• Principles-based standards and rules-based standards – advantages and disadvantages
• Selection of accounting policies and application of accounting standards: the requirements of HKAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
• The importance of the Framework for the Preparation and Presentation of Financial Statements in selecting and applying accounting policies
• The impact of materiality on financial reporting

Application deadline: 11 May 2006

Proposed changes to HKAS 1

HKAS 1 Presentation of Financial Statements is the standard that governs the appearance and layout of financial statements (the presentation and disclosure requirements). The IASB is now proposing some radical changes to the way the income statement looks and is seeking comments. This session will review the major changes proposed to HKAS 1, including:

• renaming the income statement and balance sheet
• changing the income statement to a "statement of recognised income and expense" and permitting this statement to be presented in one of two formats
• removing one of the existing options for the statement of changes in equity
• presenting a balance sheet at the start of each period The session will also address the preparation of comment letters on Exposure Drafts, to assist members in expressing their views about proposed changes to the Institute's Financial Reporting Standards Committee and Auditing and Assurance Standards Committe

Application deadline: 18 May 2006

New Standards on Pro Forma Financial Information

This session will introduce the new Hong Kong Standard on Investment Circular Reporting Engagements 300 Accountants’ Reports on Pro Forma Financial Information in Investment Circulars and Accounting Guideline 7 Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars.

For preparers of pro forma financial information, it will cover the presentation of the information and the types of adjustments that are commonly made to the unadjusted financial information. For reporting accountants, it will cover the matters that are to be considered when reporting on pro forma financial information in investment circulars and the format of reports to be issued.

This session will also give a brief update of the latest development of the Accountants’ Report Project which seeks to develop standards and guidance for reporting accountants in the conduct of engagements involving investment circulars to be issued in connection with securities transactions.

Application deadline: 1 June 2006

Discussion Paper on “Requests for Special Purpose Reports”

This session will introduce the key features of the discussion paper developed by the Auditing and Assurance Standards Committee on Special Purpose Reports. The aim of the discussion paper is to help clarify to practising members and users of their reports the principal types of special purpose engagements and the form and content of the related reports.

This session will:
• explain in general terms the nature of assurance, agreed-upon procedures and compilation engagements;
• explain the two categories of assurance engagements that may be undertaken; and
• discuss the nature of agreed-upon procedures engagements and compilation engagements. This session will also highlight some of the practical issues
that may arise when undertaking such engagements and guidance on how to address them.

Application deadline: 22 June 2006

Commonly asked financial reporting questions

From time to time, the HKICPA receives technical queries on the application of Hong Kong Financial Reporting Standards and the Financial Reporting Framework and Financial Reporting Standard for Small and Medium sized Entities. The HKICPA staff will respond to such technical queries in accordance with the HKICPA staff policy on handling technical queries, a copy of which can be found in http://www.hkicpa.org.hk/professionaltechnical/policy/techqs.pdf. This session will go through a number of commonly asked financial reporting questions, especially those received in the first half of 2006, and the staff responses to those questions.

Application deadline: 6 July 2006

Improving Audit Documentation

This session will cover the new Hong Kong Standard on Auditing (HKSA) 230, Audit Documentation, adopting the equivalent International Auditing Standard.

HKSA 230:

• Places increased emphasis on the timely preparation of audit documentation necessary to provide a sufficient and appropriate record of the basis for the auditor’s report
• Establishes a new requirement that the audit is carried out in accordance with HKSAs and applicable legal and regulatory requirements.
• Establishes a new requirement that the auditor completes the assembly of the final audit file on a timely basis after the date of the auditor’s report.
• Establishes a new requirement that the auditor should not delete or discard audit documentation after the final audit file has been assembled, unless the retention period for the audit documentation has elapsed.

Steve Ong

Commonly asked financial reporting questions

From time to time, the HKICPA receives technical queries on the application of Hong Kong Financial Reporting Standards and the Financial Reporting Framework and Financial Reporting Standard for Small and Medium sized Entities. The HKICPA staff will respond to such technical queries in accordance with the HKICPA staff policy on handling technical queries, a copy of which can be found in http://www.hkicpa.org.hk/professionaltechnical/policy/techqs.pdf. This session will go through a number of commonly asked financial reporting questions, especially those received in the first half of 2006, and the staff responses to those questions.

Application deadline: 23 August 2006

Application of the conceptual framework to independence

The Institute has applied for some time a conceptual framework to independence that requires the consideration of threats and safeguards under the Code of Ethics for Professional Accountants and the superseded Professional Ethics Statement 1.203A. This session will go through some of the common circumstances that may create threats to independence with respect to assurance engagements undertaken by professional accountants in public practice and the application of the conceptual framework to those circumstances. It will also go through some of the technical queries that HKICPA staff has received on the application of the conceptual framework.

Application deadline: 14 September 2006

Fair Value Measurement Guidance

A number of HKFRSs contain requirements to measure specified assets and liabilities at fair value. This has created concerns as to how fair values should be computed if they are not readily available. The IASB is expected to release an Exposure Draft providing guidance on applying fair value measurements very shortly and the HKICPA will release a similar Exposure Draft immediately thereafter.

The purpose of the Exposure Draft is to assist entities in applying the fair value easurements required or permitted by various financial reporting standards. At present, the guidance that is available is spread across a number of standards, leading to nconsistencies in measuring fair value. This Exposure Draft is designed to provide codified and consistent guidance for measuring fair value. The Exposure Draft will not change the application of fair value measurement requirements. That is, it will not address when fair value measurement is required or permitted and it will not consider how changes in fair value should be recognised.

This session will explain the proposals in the Exposure Draft. This will include:

• a discussion of the extent to which the proposals resolve the practical issues in applying fair value measurement; and
• an examination of the changes proposed by the Exposure Draft to existing financial reporting standards.

Application deadline: 5 October 2006

The New Audit Report Standards - HKSA 700 and HKSA 701

This session will introduce the key features of the new Audit Report Standards, HKSA 700 “The Independent Auditor’s Report on a Complete Set of General Purpose Financial Statements” and HKSA 701 “Modifications to the Independent Auditor’s Report”. Both HKSA 700 and HKSA 701 will replace SAS 600 “Auditors’ reports on financial statements”.

This session will cover:

• The major differences between unqualified Audit Reports issued under HKSA 700 as compared to SAS 600
• The major differences between qualified Audit Reports issued under HKSA 701 as compared to SAS 600
• Circumstances where an auditor’s report may be modified by adding an emphasis of matter paragraph

Application deadline: 2 November 2006

Financial Reporting Council Ordinance

The passage of the Financial Reporting Council Ordinance was the last stage of a regulatory reform package first promoted by the Institute over three years ago. In this post-Enron world, the Financial Reporting Council will investigate standards of financial reporting and audits of listed companies, while the Institute will retain responsibility for audits of non-listed companies and acting as prosecutor in disciplinary proceedings. The session will outline developments during the Bill’s passage through LegCo. The principal provisions of the Ordinance will be outlined and the structure of the FRC will be explained as will the FRC’s powers and members’ obligations in these respects. Reference will also be made to the Institute’s funding obligations, the arrangements for which necessitated amendments to the Professional Accountants Ordinance.

Application deadline: 23 November 2006

Financial Reporting Review 2006

This session will provide an overview of the changes in financial reporting 2006. In particular, this session will highlight the new standards, amendments to, and interpretations of, HKFRSs that are effective for the periods beginning on or after 1 January 2006 and therefore may need to be considered for the first time in the preparation of the 2006 annual financial statements. This session will also highlight the exposure drafts issued in 2006 but not yet become effective so as to give some indication as to the likely developments in future financial reporting.

Application deadline: 7 December 2006

Commonly asked financial reporting questions

From time to time, the HKICPA receives technical queries on the application of Hong Kong Financial Reporting Standards and the Financial Reporting Framework and Financial Reporting Standard for Small and Medium sized Entities. The HKICPA staff will respond to such technical queries in accordance with the HKICPA staff policy on handling technical queries, a copy of which can be found in http://www.hkicpa.org.hk/professionaltechnical/policy/techqs.pdf. This session will go through a number of commonly asked financial reporting questions, especially those received in the first half of 2006, and the staff responses to those questions.

Application deadline: 15 September 2006

Fair Value Measurement Guidance

A number of HKFRSs contain requirements to measure specified assets and liabilities at fair value. This has created concerns as to how fair values should be computed if they are not readily available. The IASB is expected to release an Exposure Draft providing guidance on applying fair value measurements very shortly and the HKICPA will release a similar Exposure Draft immediately thereafter.

The purpose of the Exposure Draft is to assist entities in applying the fair value easurements required or permitted by various financial reporting standards. At present, the guidance that is available is spread across a number of standards, leading to nconsistencies in measuring fair value. This Exposure Draft is designed to provide codified and consistent guidance for measuring fair value. The Exposure Draft will not change the application of fair value measurement requirements. That is, it will not address when fair value measurement is required or permitted and it will not consider how changes in fair value should be recognised.

This session will explain the proposals in the Exposure Draft. This will include:

• a discussion of the extent to which the proposals resolve the practical issues in applying fair value measurement; and
• an examination of the changes proposed by the Exposure Draft to existing financial reporting standards.

Application deadline: 9 November 2006

The New Audit Report Standards - HKSA 700 and HKSA 701

This session will introduce the key features of the new Audit Report Standards, HKSA 700 “The Independent Auditor’s Report on a Complete Set of General Purpose Financial Statements” and HKSA 701 “Modifications to the Independent Auditor’s Report”. Both HKSA 700 and HKSA 701 will replace SAS 600 “Auditors’ reports on financial statements”.

This session will cover:

• The major differences between unqualified Audit Reports issued under HKSA 700 as compared to SAS 600
• The major differences between qualified Audit Reports issued under HKSA 701 as compared to SAS 600
• Circumstances where an auditor’s report may be modified by adding an emphasis of matter paragraph

Application deadline: 16 November 2006

Financial Reporting Review 2006

This session will provide an overview of the changes in financial reporting 2006. In particular, this session will highlight the new standards, amendments to, and interpretations of, HKFRSs that are effective for the periods beginning on or after 1 January 2006 and therefore may need to be considered for the first time in the preparation of the 2006 annual financial statements. This session will also highlight the exposure drafts issued in 2006 but not yet become effective so as to give some indication as to the likely developments in future financial reporting.

Application deadline: 11 January 2007

The New Audit Report Standards - HKSA 700 and HKSA 701

This session will introduce the key features of the new Audit Report Standards, HKSA 700 “The Independent Auditor’s Report on a Complete Set of General Purpose Financial Statements” and HKSA 701 “Modifications to the Independent Auditor’s Report”. Both HKSA 700 and HKSA 701 will replace SAS 600 “Auditors’ reports on financial statements”.

This session will cover:

• The major differences between unqualified Audit Reports issued under HKSA 700 as compared to SAS 600
• The major differences between qualified Audit Reports issued under HKSA 701 as compared to SAS 600
• Circumstances where an auditor’s report may be modified by adding an emphasis of matter paragraph

Application deadline: 30 November 2006

Proposed New Audit Independence Requirements

The IFAC's International Ethics Standards Board for Accountants Exposure Draft on Auditor Independence Requirements proposes to update and strengthen the auditor independence requirements contained in the IFAC
Code of Ethics for Professional Accountants. As part of the HKICPA International Convergence Programme, the
new proposals will affect the HKICPA Code of Ethics for Professional Accountants.

This session will contain the significant proposed modifications to the Code:

• Extending the partner rotation requirements to all key audit partners on an audit of an entity of significant public interest;
• Updating requirements related to the provision of non-assurance services, including setting out guidance
on the provision of tax services to audit clients;
• Providing guidance on key audit firm personnel accepting employment with audit clients that are entities of significant public interest; and
• Extending the independence requirements to the audits of a wide range of entities of significant public interest.

Application deadline: 23 February 2007

Fair Value Measurements Discussion Paper

HKFRSs contain requirements to measure specified assets and liabilities at fair value. This has created concerns as to how fair values should be developed if they are not readily available. The IASB released a Discussion Paper in December 2006 and the Institute is seeking comments on the Discussion Paper.

The Discussion Paper is a first step in a project designed to ensure that fair value measurements required or permitted by existing financial reporting standards are defined and applied consistently. At present, the guidance that is available is inconsistent and spread across a number of standards. It is important to note that the project will not change any requirements to measure assets and liabilities at fair value. That is, it will not address when fair value measurement is required or permitted and it will not consider how changes in fair value should be recognised.

This session will contain similar content to the sessions in 2006 that explained the anticipated proposals and will include a discussion of the extent to which the proposals resolve the practical issues in applying fair value measurement.

Application deadline: 9 March 2007

Group and Treasury Share Transactions and Service Concession Arrangements - HK(IFRIC) Interpretations 11 and 12

HK(IFRIC) Interpretation 11, which is converged with IFRIC Interpretation 11, addresses how to apply HKFRS 2
Share-based Payment to share-based payment arrangements involving an entity’s own equity instruments
or equity instruments of another entity in the same group. This session will cover share based payment arrangements involving an entity’s own equity instruments and those involving equity instruments of the parent.

IFRIC Interpretation 12, which is converged with IFRIC Interpretation 12, gives guidance on the accounting by
operators for public-to-private service concession arrangements. Service concessions are arrangements whereby a government or other public sector entity grants contracts for the supply of public services such as roads, airports and energy and water supply. Control of the assets remains in public hands but the private sector operator is responsible for construction activities, as well as for operating and maintaining the public sector infrastructure. This session will cover the general principles on recognising and measuring the obligations and related rights in service concession arrangements.

Application deadline: 16 March 2007

Operating Segments - HKFRS 8

HKFRS 8, which is converged with IFRS 8, sets out requirements for disclosure of information about an entity's operating segments and also about the entity's products and services, the geographical areas in which it operates and its major customers. IFRS 8 forms part of the International Accounting Standards Board's work in its joint short-term convergence project with the US Financial Accounting Standards Board to reduce the differences between IFRSs and US GAAP. HKFRS 8 will replace HKAS 14 Segment Reporting and aligns segment reporting with the requirements of the US standard SFAS 131 Disclosures about Segments of an Enterprise and Related Information.

This session will cover the management approach to reporting on the financial performance of operating segments and disclosure requirements.

Application deadline: 13 April 2007

Review of Interim Financial Information Performed by the Independent Auditor of the Entity - HKSRE 2410

The proposed HKSRE 2410, which will be issued as part of the HKICPA International Convergence Programme, is limited to a review of interim financial information performed by the independent auditor of the financial statements of the entity. HKSRE 2410 will replace SAS 700 Engagements to review Interim Financial Reports.

T his session will contain the guidance on the auditor's professional responsibilities when the auditor undertakes an engagement to review interim financial information of an audit client and on the form and content of the report.

Application deadline: 20 April 2007

Companies (Revision of Accounts & Reports) Regulation, gazetted on 16 February 2007, sets out the implementation details for companies to revise their financial statements to prevent reliance being placed on any previously issued financial statements. Subject to negative vetting by lawmakers, the regulation will come into operation on 20 April 2007. The regulation will enable company members and investors to be informed of a company's accurate business and financial situation, promoting market transparency and upgrading corporate governance.

This session will contain an outline of the significant proposals and discuss how auditors should consider the subsequent events and prepare a new audit report on the revised financial statements.

Application deadline: 10 May 2007

The IASB is working towards convergence with other national standard setters where appropriate.

This session will discuss the recently released changes to HKAS 23 Borrowing Costs resulting from the IASB’s convergence programme with the US FASB. The session will also consider the exposure draft on related parties which addresses when state-owned enterprises should be disclosed as related parties (convergence with the Mainland) and a revised definition of related parties (convergence with Japan).

Application deadline: 24 May 2007

The proposals are based on the work of a working group comprising of representatives of the HKICPA and relevant government departments established in 2002 to undertake a comprehensive review of the accounting and auditing provisions of the Companies Ordinance. The rewrite aims to make the company law more user-friendly and provide Hong Kong with a modernized legal infrastructure commensurate with its status as a major international business and financial centre. As the first of a series of public consultations, this consultation paper sets out the proposals to improve the accounting and auditing provisions in the Companies Ordinance, for comment by 29 June 2007.

This session will contain a summary of the high level proposals ranging from providing an accounting reference date, making the directors' report a more forward-looking document, ensuring directors consider carefully whether they have disclosed all relevant audit information to the auditors and enhancing auditors' rights to access to information and providing them with qualified privileges.

Application deadline: 7 June 2007

HKFRS 4 Insurance Contracts was issued in August 2004 pending the completion of the IASB's major project addressing the accounting for insurance contracts.

The IASB is expected to issue a Discussion Paper in April/May 2007 which will be the first step in developing a comprehensive standard on accounting for insurance contracts. This session will outline the issues identified in the Discussion Paper and tentative proposals for addressing those issues.

It is important to note that insurance contracts can be issued by companies other than insurance companies. For example, a product warranty issued by a party other than a manufacturer, dealer or retailer meets the definition of an insurance contract. As a result, the developments in accounting for insurance contracts will have a wider impact than just insurance companies.

Application deadline: 21 June 2007

The HKICPA has issued an Invitation to Comment on the IASB exposure draft of IFRS for SMEs for comment until 1 September 2007.

This session will contain an overview of the IASB's exposure draft and a comparison of the key differences between the IASB IFRS for SMEs and the HKICPA SME-FRS including the scope, concepts and pervasive principles, financial statement presentation, cash flow statement, financial assets and financial liabilities, investment property, property, plant and equipment, leases, revenue, government grants, borrowing costs, impairment, income taxes, foreign currency translation.

Application deadline: 12 July 2007

Issues in Implementing HKFRSs - Part III

HKFRSs have been converged with IFRSs for 3 years. It is time to look at some common implementation issues in order to avoid making these mistakes and to improve the quality of financial reporting in Hong Kong. This session will cover implementation issues relating to HKAS 24 Related Party Disclosures, HKAS 28 Investments
in Associates and HKAS 36 Impairment of Assets.

Application deadline: 3 June 2008

Monday
30 June 2008
(Re-run)

HKAS 1 (Revised) Presentation of Financial Statements

This session will discuss the main changes from the previous version and the introduction of a statement of comprehensive income in preparation for 2009.

Application deadline: 24 June 2008

Points to Note for Auditors - Part II

This session will discuss the key principles of planning and finalisation of an audit and will cover HKSA 300 Planning an Audit of Financial Statements, HKSA 315
Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement, HKSA 330 The Auditor’s Procedures in Response to Assessed Risks,
HKSA 570 Going Concern and HKSA 580 Management Representations.

Application deadline: 2 July 2008

Friday
11 July 2008
(Re-run)

Points to Note for Auditors - Part III

This session will focus on fraud consideration, auditing related party transactions and audit documentation. It will cover HKSA 230 Audit Documentation, HKSA 240 The
Auditor’s Responsibilities to Consider Fraud in an Audit of Financial Statements and HKSA 550 Related Parties.

Application deadline: 16 July 2008

Issues in Implementing HKFRSs - Part IV

HKFRSs have been converged with IFRSs for 3 years. It is time to look at some common implementation issues in order to avoid making these mistakes and to improve the quality of financial reporting in Hong Kong. This session will cover implementation issues relating to HKAS 32 Financial Instruments: Presentation and HKAS 39 Financial Instruments: Recognition and Measurement.

Application deadline: 23 July 2008

HK(IFRIC)-Int 13 Customer Loyalty Programmes

This session will discuss the accounting by entities that grant award credits to customers. HK(IFRIC)-Int 13 Customer Loyalty Programmes applies from 1 July 2008.

Application deadline: 30 July 2008

HKAS 27 (Revised) Consolidated and Separate Financial Statements

This session will contain an outline of the key changes in HKAS 27 that are effective for periods beginning on or after 1 July 2009 with an illustration of change in ownership interest of subsidiary.

Application deadline: 6 August 2008

HKFRS 3 (Revised) Business Combinations

This session will contain an outline of the key changes in HKFRS 3 that are effective for periods beginning on or after 1 July 2009.

Application deadline: 13 August 2008

Amendments to HKAS 32 Financial Instruments: Presentation and HKAS 1 Presentation of Financial Statements - Puttable Financial Instruments and Obligations Arising on Liquidation

This session will contain an outline of the key changes in HKAS 32 and HKAS 1 that are effective for periods beginning on or after 1 January 2009 and their application issues.

Application deadline: 20 August 2008

Friday
29 August 2008
(Re-run)

Tuesday
2 September 2008
(Re-run)
Rescheduled to
1 September 2008

Points to Note for Auditors - Part I

This session will discuss some of the key issues on applying HKSQC 1 Quality Control for Firms That Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements.

Application deadline: 26 August 2008

Issues in Implementing HKFRSs - Part I

HKFRSs have been converged with IFRSs for 3 years. It is time to look at some common implementation issues in order to avoid making these mistakes and to improve the quality of financial reporting in Hong Kong.

This session will cover implementation issues relating to HKFRS 3 Business Combinations.

Application deadline: 29 August 2008

Issues in Implementing HKFRSs - Part II

HKFRSs have been converged with IFRSs for 3 years. It is time to look at some common implementation issues in order to avoid making these mistakes and to improve the quality of financial reporting in Hong Kong.

This session will cover implementation issues relating to HKAS 1 Presentation of Financial Statements, HKAS 14 Segment Reporting (replaced by HKFRS 8 Operating Segments), HKAS 18 Revenue and HKAS 21 The Effects of Changes in Foreign Exchange Rates.

Application deadline: 3 September 2008

Points to Note for Auditors - Part II

This session will discuss the key principles of planning and finalisation of an audit and will cover HKSA 300 Planning an Audit of Financial Statements, HKSA 315 Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement, HKSA 330 The Auditor’s Procedures in Response to Assessed Risks, HKSA 570 Going Concern and HKSA 580 Management Representations.

Application deadline: 24 September 2008

Issues in Implementing HKFRSs - Part III

HKFRSs have been converged with IFRSs for 3 years. It is time to look at some common implementation issues in order to avoid making these mistakes and to improve the quality of financial reporting in Hong Kong.

This session will cover implementation issues relating to HKAS 24 Related Party Disclosures, HKAS 28 Investments in Associates and HKAS 36 Impairment of Assets.

Application deadline: 8 October 2008

Points to Note for Auditors – Part III

This session will focus on fraud consideration, auditing related party transactions and audit documentation. It will cover HKSA 230 Audit Documentation, HKSA 240 The Auditor's Responsibilities to Consider Fraud in an Audit of Financial Statements and HKSA 550 Related Parties.

Application deadline: 15 October 2008

Issues in Implementing HKFRSs - Part IV

HKFRSs have been converged with IFRSs for 3 years. It is time to look at some common implementation issues in order to avoid making these mistakes and to improve the quality of financial reporting in Hong Kong.

This session will cover implementation issues relating to HKAS 32 Financial Instruments: Presentation and HKAS 39 Financial Instruments: Recognition and Measurement.

Application deadline: 22 October 2008

HKAS 1 (Revised) Presentation of Financial Statements

This session will discuss the main changes from the previous version and the introduction of a statement of comprehensive income in preparation for 2009.

Application deadline: 5 October 2008

HKAS 27 (Revised) Consolidated and Separate Financial Statements

This session will contain an outline of the key changes in HKAS 27 that are effective for periods beginning on or after 1 July 2009 with an illustration of change in ownership interest of subsidiary.

Application deadline: 12 November 2008

HKFRS 3 (Revised) Business Combinations

This session will contain an outline of the key changes in HKFRS 3 that are effective for periods beginning on or after 1 July 2009.

Application deadline: 19 November 2008